Does the seventh interest rate cut this year really make a
difference? Hmmm, let me think. . .no. It is a bit like
rearranging the deck chairs on the Titanic. The chairs may look
nice and somebody may get a few more minutes of enjoyment from the
cruise. But in the end, the "unsinkable" still sinks. More on
that in a minute.

In the meantime, I couldn't help but laugh out loud at Abbey
Joseph Cohen's "revision" of her year-end S&P target. Seems that
1550, which is roughly 380 points above current levels, was a bit
optimistic. So taking it down to 330 points above current level
seemed much more reasonable. That would put the S&P at 1500, its
former high, and a full 50 points lower than previous levels.
This is much more achievable in a faltering economy over the next
four months than previous estimates? Get real Abbey. The blind
squirrel found her acorn in the late 1990's. Trouble is that the
acorn-producing oaks are now firewood and she does not know it.

We have beat up on charlatan analysts within this site for many
months now for their shameful fortune-teller-like behavior. It
should be apparent that they are so far out of touch with reality
as to defy all common sense. Pathological liars, frequently
proven wrong, will never take responsibility for their previous
flubbed calls either.

Investors would do better to imagine almost every analyst with a
big red nose and huge floppy feet. It would then be easier to
give them the respect they have earned and deserved - that of
circus clowns. Nobody in his or her right mind would follow a
clown's advice.

Nope, I'm convinced now that the only difference between a clown
and an analyst is face paint and a bulbous nose. Both have a job
to keep the crowd entertained and in a buying mood at the circus.
But analysts want to give that a more respectable appearance.

And as long as we are on the subject of deception, has anybody
else begun to notice the overuse of the word, "stealth"? It is
usually related to the words, "rally" or "move". Analysts (and I
include CNBC in this) have talked about so many stealth moves and
rallies in various sectors over the last few months that it has
become code language for, "I was not observant enough to see this
before even though it was right under my nose". Just an
observation.

Now, on to Emperor Al and his new clothes. Oops, he is naked!
Many in past months have already turned and walked away from his
parade because they have seen him exposed much longer than they
care to. However, that does not stop the remaining onlookers from
marveling at the fineness of the non-existent threads.

Ok, here is the truth. It does not matter by how much the Fed cut
rates - half point, quarter point, or no cut at all. The economy,
not just here, but around the world is slipping into the abyss.
The Fed even cited this in their commentary as they opted for a 25
bp, or quarter point cut, which surprised no one. The fed noted
that capital spending, corporate profits, and foreign economies
suggest further weakness is a continued worry going forward. Only
consumer spending remains a bright spot.

Fact is that economic declines have happened hundreds, if not
thousands of times before always to be met by recovery at some
point in the future. Whether four hours, days, months, years, or
decades, economies cycle. That is their job. Greenspan is
powerless to change that just as the great and powerful Oz was
powerless to help Dorothy and Company. He may be able to fine-
tune economic growth with policy changes, though even that is
debatable. But he can never change human nature and that is
undisputable.

Be that as it may, the quarter-point Fed cut today leaves the door
open for another cut in October. Nobody is surprised or caught
off guard by this at all given the declining economic conditions.
There was no sharp rise on the news. Not even a sharp decline
ensued, but rather an orderly decline as investors and traders
finally have to acknowledge that even the Fed sees a slowdown now.
They have identified the elephant in the cherry tree. It is about
time.

While this may seem gloomy, the market now has a clear direction
of sight for the fundamental trend. And we can profit from that.
However, it is precisely at this moment that the markets could
seek to humiliate as many participants as possible. That would be
accomplished by staging a major rally into the fall. Given the
fundamentals, is that even remotely possible? The charts tell an
interesting story. Look over my shoulder as we dive into the
major indexes.

Dow Industrial index (INDU):

Rally? Nowhere in sight. All oscillators are pointed down and
headed to oversold. Candles have jumped off a cliff on the Fed's
announcement reflecting investors' recognition that there is an
elephant in the cherry tree. The Dow lost nearly 200 points from
its high today. Neutral wedges that were forming last week have
made a break to the south showing us the big picture trend. 60/30
charts are also pointed south and tell us they have further to go,
perhaps to 10,125, which is not so far off from the current level
of 10,167. 10,000 is not far off and neither is 9800 after that.
Contrarian thinking would have bulls getting ready for another
daytrading shot with calls as soon as oversold is reached. While
the daily/weekly charts tell us the next few days could be down,
they too are approaching oversold and will then be subject to
renewed bullish action. For now? Down without much of a net.

Scorekeepers should note that the index fell 145 points to close
at 10,167 on just over 1 bln shares. Decliners beat advancers
17:13.

NASDAQ-100 chart (NDX):

Nothing much different for the NASDAQ either except that it is
further down the curve and actually into oversold territory
already as opposed to its brethren, which have yet to get there.
Who says the NASDAQ can't lead? It can as long as the direction
is down! Seriously, the weekly/daily stochastic in oversold
suggest that the index may be setting up to turn around, but only
in the same fashion that an aircraft carrier turns around. It
does not happen on a dime, and the oscillators have yet to show
they have received the input to start the turn. Note, however,
that weekly support levels are not far off at roughly 1400, which
could ultimately provide some support.

The 60/30 charts are in a kamikaze dive too. Recovery appears
unlikely with no immediate support in sight until the stochastics
on both charts enter oversold for a new cycle back up.

S&P 500 chart (SPX):

As for the "real" market, nothing different here either. Support
violated and oscillators are pointed down on both long and short-
term charts. Mild short-term support level (60-min) yes. But the
oscillators still suggest more pain to come for call holders.
Real support comes in at 1125 then 1100. Sure was fun riding the
SPX down 25 points in 100 minutes if you managed to time that play
perfectly. Looks like more to come for a part of tomorrow.

Speaking of tomorrow, how can we trade it for profit? Just use
the oscillators and support levels. The bigger trends still point
to more bearish action and daytraders might possibly be able to
short the open for a quick profit or until the near-term
oscillators hit bottom. There is simply nothing on these charts
to get bullish about though the oscillators are nearing oversold
and would then be subject to a bounce. But that has not happened
yet.

One other thing that needs attention is the VIX. It has been
pointed out here and on sister site, OIN that while the markets
have been falling, the VIX is not suffering from any significant
amounts of fear. Plenty of bulls are still there to buy calls
thus keeping the VIX well under 30. Should this market actually
get bearish with enough put action to get the VIX back over 30
that would be a Jellystone picnic for every Yogi and Boo Boo in
forest. The point is that if negative market moves still show
this amount of optimism, how will the market look if investors get
pessimistic? Hello now lows!

One word of caution. It is precisely at these moments when
confidence of market direction is high that we get complacent and
think we cannot miss on this ever-so-obvious trade. That is when
The Great Humiliator strikes to empty our accounts by moving
markets in the exact opposite direction than what we expect. So
expect the unexpected (the possibility of a bullish reversal) and
do not just walk away from your screen after entering puts
assuming the trade will effortlessly go your way. The market is
still a treacherous place to play, and we need to remain prudent
in our trading if we are to be profitable at it.

That said, let us make a profitable day for ourselves no matter
which direction the market moves. See you at the bell.